1. A project your firm is considering for implementation has these estimated costs and revenues: an investment cost of $50,000; maintenance costs that start at $5,000 at the end of year (EOY) 1 and increase by $1,000 for each of the next 4 years, and then remain constant for the following 5 years; savings of $20,000 per year (EOY 1-10); and finally a resale value of $35,000 at the EOY 10. If the project has a 10-year life and the firm's MARR is 10% per year, what is the present worth of the project? Is it a sound investment opportunity?2. A toll bridge across the Mississippi River is being considered as a replacement for the current 1-40 bridge linking Tennessee to Arkansas. Because this bridge, if approved, will become a part of the U.S. Interstate Highway system, the B-C ratio method must be applied in the evaluation. Investment costs of the structure are estimated to be $17,500,000 and $325,000 per year in operating and maintenance costs are anticipated. In addition, the bridge must be resurfaced every fifth year of its 30-year projected life at a cost of $1,250,000 per occurrence (no resurfacing cost in year 30). Revenues generated from the toll are anticipated to be $2,500,000 in its first year of operation, with a projected annual rate of increase of 2.25% per year due to the anticipated annual increase in traffic across the bridge. Determine the costs and benefits for each alternative in terms of its economic aspect and corresponding monetary estimate. Cite also possible disbenefits for each alternative, if any. 1. A project your firm is considering for implementation has these estimated costs and revenues: aninvestment cost of $50,000; maintenance costs that start at $5,000 at the end of year (EOY) 1 andincrease by $1,000 for each of the next 4 years, and then remain constant for the following 5 years;savings of $20,000 per year (EOY 1–10); and finally a resale value of $35,000 at the EOY 10. If theproject has a 10-year life and the firm's MARR is 10% per year, what is the present worth of the project?Is it a sound investment opportunity?2. A toll bridge across the Mississippi River is being considered as a replacement for the current l-40bridge linking Tennessee to Arkansas. Because this bridge, if approved, will become a part of the U.S.Interstate Highway system, the B-C ratio method must be applied in the evaluation. Investment costsof the structure are estimated to be $17,500,000 and $325,000 per year in operating and maintenancecosts are anticipated. In addition, the bridge must be resurfaced every fifth year of its 30-year projectedlife at a cost of $1,250,000 per occurrence (no resurfacing cost in year 30). Revenues generated fromthe toll are anticipated to be $2,500,000 in its first year of operation, with a projected annual rate ofincrease of 2.25% per year due to the anticipated annual increase in traffic across the bridge.Determine the costs and benefits for each alternative in terms of its economic aspect andcorresponding monetary estimate. Cite also possible disbenefits for each alternative, if any.

Present value is the current value of the future sum of money, at a specified rate of return. The…

Answered: project your firm is considering for…

Traffic and Highway Engineering

5th Edition

ISBN:9781305156241

Author:Garber, Nicholas J.

Publisher:Garber, Nicholas J.

Chapter13: Evaluating Transportation Alternatives

Section: Chapter Questions

Problem 10P

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1. A project your firm is considering for implementation has these estimated costs and revenues: an investment cost of $50,000; maintenance costs that start at $5,000 at the end of year (EOY) 1 and increase by $1,000 for each of the next 4 years, and then remain constant for the following 5 years; savings of $20,000 per year (EOY 1-10); and finally a resale value of $35,000 at the EOY 10. If the project has a 10-year life and the firm's MARR is 10% per year, what is the present worth of the project? Is it a sound investment opportunity?

2. A toll bridge across the Mississippi River is being considered as a replacement for the current 1-40 bridge linking Tennessee to Arkansas. Because this bridge, if approved, will become a part of the U.S. Interstate Highway system, the B-C ratio method must be applied in the evaluation. Investment costs of the structure are estimated to be $17,500,000 and $325,000 per year in operating and maintenance costs are anticipated. In addition, the bridge must be resurfaced every fifth year of its 30-year projected life at a cost of $1,250,000 per occurrence (no resurfacing cost in year 30). Revenues generated from the toll are anticipated to be $2,500,000 in its first year of operation, with a projected annual rate of increase of 2.25% per year due to the anticipated annual increase in traffic across the bridge. Determine the costs and benefits for each alternative in terms of its economic aspect and corresponding monetary estimate. Cite also possible disbenefits for each alternative, if any.

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